Q: Hello 5i,
Just had a look at ATS balance sheet which your report on Sept 5th suggested had improved. Can you help me understand how the more than doubling of "goodwill and other intangibles" which in march of 2020 were $800+million, compared to march 2023 were $1.7 billion will impact the company going forward? How did "intangible" assets grow so much and does this typically inflate assets on the Balance Sheet? Total debt in that time frame has also doubled. With reporting due next week(?) is there anything else you can shed light on for we shareholders?
Does ATS usually meet or miss on numbers?
TIA,
Just had a look at ATS balance sheet which your report on Sept 5th suggested had improved. Can you help me understand how the more than doubling of "goodwill and other intangibles" which in march of 2020 were $800+million, compared to march 2023 were $1.7 billion will impact the company going forward? How did "intangible" assets grow so much and does this typically inflate assets on the Balance Sheet? Total debt in that time frame has also doubled. With reporting due next week(?) is there anything else you can shed light on for we shareholders?
Does ATS usually meet or miss on numbers?
TIA,
5i Research Answer:
Goodwill and debt, are typically mostly impacted by acquisitions. When a company is bought for higher than book value, the difference is attributed to goodwill. ATS has made 21 acquisitions since the end of 2019, and this has boosted both goodwill and debt. In some deals prices were not disclosed by some were quite significant. Goodwill can at times impact earnings if the acquisitions do not turn out as expected. But we would not expect this yet as these deals are still 'newish' and the company continues to grow nicely. ATS 'beats' about 75% of the time. The absolute stock move is 6.2% on earnings announcements in the past decade, ranging from +17% to -11%.